The production function of a firm will change whenever :

examrobotsa's picture
Q: 55 (CDS-II/2013)
The production function of a firm will change whenever :

question_subject: 

Science

question_exam: 

CDS-II

stats: 

0,27,90,27,16,25,49

keywords: 

{'production function': [0, 0, 0, 1], 'input price changes': [0, 0, 0, 1], 'firm': [0, 0, 0, 3], 'relevant technology changes': [0, 0, 0, 1], 'output': [0, 0, 0, 4], 'input': [0, 0, 0, 2]}

The correct answer is option 1: input price changes.

A production function represents the relationship between the inputs used in production and the output produced by a firm. The production function can change when there is a change in any of the factors that affect production.

Option 1 states that the production function will change when input prices change. When the price of an input, such as labor or raw materials, increases or decreases, it can affect the cost of production. For example, if the price of labor increases, the firm may decide to substitute labor with capital or automation to reduce costs. This change in the input prices can lead to a change in the production function.

Option 2 states that the production function will change when the firm employs more of any input. While this can affect the level of output, it does not necessarily change the production function itself.

Option 3 states that the production function will change when the firm increases its level of output. However, increasing the level of output does not directly change the production function.

Option 4 states that the production function will change when the relevant technology changes. While changes in technology can impact the production process and potentially alter the production function, this option is not as general and universally applicable as option 1, which covers

Practice this on app